AGENCY:

Internal Revenue Service (IRS), Treasury.

ACTION:

Notice of proposed rulemaking by cross-reference to temporary regulations and notice of public hearing.

SUMMARY:

In this issue of the Bulletin, the IRS is issuing revised temporary regulations (T.D. 9116) relating to the new markets tax
credit. The text of those regulations also serves as the text of these proposed regulations. This document also provides
notice of a public hearing on these proposed regulations.

DATES:

Written or electronic comments must be received by May 10, 2004. Outlines of topics to be discussed at the public hearing
scheduled for Wednesday, June 2, 2004, must be received by May 10, 2004.

SUPPLEMENTARY INFORMATION:

Background

Temporary regulations in this issue of the Bulletin amend the Income Tax Regulations (26 CFR Part 1) relating to section 45D.
The temporary regulations provide guidance for taxpayers claiming the new markets tax credit under section 45D. The text
of those regulations also serves as the text of these proposed regulations. The preamble to the temporary regulations explains
the amendments.

Special Analyses

It has been determined that this notice of proposed rulemaking is not a significant regulatory action as defined in Executive
Order 12866. Therefore, a regulatory assessment is not required. It also has been determined that section 553(b) of the
Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations, and because the regulations do not
impose a new collection of information on small entities, the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not apply.
Pursuant to section 7805(f) of the Internal Revenue Code, this notice of proposed rulemaking will be submitted to the Chief
Counsel for Advocacy of the Small Business Administration for comment on their impact on small business.

Comments and Public Hearing

Before these proposed regulations are adopted as final regulations, consideration will be given to any written comments (a
signed original and eight (8) copies) or electronic comments that are submitted timely to the IRS. Comments are requested
on all aspects of the proposed regulations. In addition, the IRS and Treasury Department specifically request comments on
the clarity of the proposed regulations and how they can be revised to be more easily understood. All comments will be available
for public inspection and copying.

A public hearing has been scheduled for Wednesday, June 2, 2004, at 10 a.m. in the IRS Auditorium, Internal Revenue Building,
1111 Constitution Avenue, NW, Washington, DC. All visitors must present photo identification to enter the building. Because
of access restrictions, visitors will not be admitted beyond the immediate entrance area at the Constitution Avenue entrance
more than 30 minutes before the hearing starts. For information about having your name placed on the building access list
to attend the hearing, see the “FOR FURTHER INFORMATION CONTACT” section of this preamble.

The rules of 26 CFR 601.601(a)(3) apply to the hearing.

Persons who wish to present oral comments at the hearing must submit written comments and an outline of the topics to be discussed
and the time to be devoted to each topic (preferably a signed original and eight (8) copies) by May 10, 2004. A period of
10 minutes will be allotted to each person for making comments. An agenda showing the scheduling of the speakers will be
prepared after the deadline for receiving outlines has passed. Copies of the agenda will be available free of charge at the
hearing.

Proposed Amendments to the Regulations

Accordingly, 26 CFR part 1 is proposed to be amended as follows:

PART 1—INCOME TAXES

Paragraph 1. The authority citation for part 1 continues to read in part as follows:

Authority: 26 U.S.C. 7805 * * *

Par. 2. Section 1.45D-1 is amended to read as follows:

§1.45D-1 New markets tax credit.

[The text of the amendments to this proposed section is the same as the text of the amendments to §1.45D-1T published elsewhere
in this issue of the Bulletin.]

Mark E. Matthews, Deputy Commissioner for Services and Enforcement.

Note

(Filed by the Office of the Federal Register on March 10, 2004, 8:45 a.m., and published in the issue of the Federal Register
for March 11, 2004, 69 F.R. 11561)

Drafting Information

The principal author of these regulations is Paul F. Handleman, Office of the Associate Chief Counsel (Passthroughs and Special
Industries), IRS. However, other personnel from the IRS and Treasury Department participated in their development.